Traditional Asset Classes have an Alternative Asset Class Competitor

Nov 8, 2016 Blog  Alternative Asset Class


It’s important to know and understand which type of investment best suits your needs and financial situation. You first should determine what the available options are. You get traditional asset classes such as stocks, bonds and cash. Stocks are securities that represent ownership in a company. You get two kinds of stocks, namely common and preferred. Common stock holders can normally vote at shareholder meetings and receive dividends. Those who invest in preferred stock normally can’t vote, but have a higher claim on assets and earnings than common stockholders do.

Bonds are debt. The investor lends their funds to the borrower who then repays that amount back at a fixed interest rate. The borrower of bonds is most likely to be corporations and government entities. Cash is the most liquid of assets and includes actual cash as well as equivalents which can easily be converted into cash like money markets and treasury bills.

These traditional asset classes are what spring to mind when an investor mentions that they are considering diversifying their portfolio. However, there are alternative asset classes which one should consider before settling for the traditional way of doing things. There are different types of alternative asset classes such as art, impact investments, closed ended funds, private offerings and peer to peer lending.

If you want regular interest payments that will keep up with inflation then peer to peer lending might be your alternative asset class option. How it works is borrowers complete an online application via a platform and they are assigned a score along with an interest rate for their loan. Investors (lenders) are able to look over the borrowers details and fund the borrower’s loan. You are also able to set up your specific criteria on the platform and have funds fill the loans which best suit your diversification needs.

RainFin is a marketplace lending platform and we offer an alternative asset class.

This article was based on two separate articles which you can read here and here.



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